State budget cuts get preliminary OK

PHOENIX - Defeating some proposed Democratic changes, the Republican-controlled House moved the state one step closer to reducing the budget deficit - at least a bit.

On a voice vote, lawmakers gave preliminary approval to the plan, which trims about $75 million from state agencies and comes up with another $120 million by raiding special funds and other maneuvers. A final vote on the plan, which already has been approved by the Senate, is set for Saturday.

The changes, if approved by Gov. Jan Brewer, come on top of $300 million in spending cuts and $150 million in fund raids enacted just last month. But it still leaves a $1.4 billion gap between revenues and expenses.

With time running out before the end of the fiscal year on July 1, House Speaker Kirk Adams said there is little chance of using additional revenues to bridge the gap. He said even if lawmakers eventually agree to put a plan by Brewer for a one-cent sales tax hike on the ballot - and even if voters approve - new revenues would not start flowing until at least June.

That leaves only a couple of options.

One involves borrowing.

For example, the state could get an investor to provide up-front cash in exchange for being repaid, over time, with interest from money the state is set to get in the future, like Arizona's share of the $368 billion settlement tobacco companies made with the states a decade ago.

Adams said there also will have to be further "significant'' budget cuts.

Rep. John Kavanagh, R-Fountain Hills, said there's a third option: taking money that now is legally reserved for voter-mandated programs. These range from health care services and smoking cessation programs to state aid to education.

That, however, would require voters to approve diverting those funds, something that cannot be done until a May special election. And the proposal is likely to generate opposition from those who benefit from the mandated programs.

Friday's House debate was more focused on the immediate changes.

Rep. David Schapira, D-Tempe, sought to restore more than $3 million in cuts proposed for the Department of Revenue. He said they don't make sense.

"The Department of Revenue estimates that each auditor in the department brings in approximately $400,000 a year.

"I guarantee you there's not a single auditor there that makes that much in salary,'' Schapira continued. And he said each collector the agency has brings in an average of $800,000 a year.

Rep. Eric Meyer, D-Paradise Valley, tried to convince colleagues not to take money from the Arizona Health Care Cost Containment System.

Meyer said the state is legally precluded from reducing the scope of that program. He said that means the cuts will fall disproportionately hard on other AHCCCS-funded services like helping to fund graduate medical education. And that, he said, will mean fewer doctors doing their residency programs in rural areas of the state where medical help is needed.

That also was beaten back by Republicans, as was a separate proposal by Rep. Chad Campbell, D-Phoenix, to reduce the cuts to the state Parks Department. Agency officials have said the money being taken could force closure of the entire system.

Rep. Lucy Mason, R-Prescott, said she worries about that possibility. But Mason voted with fellow Republicans to kill Campbell's amendment.

Kavanagh said lawmakers need to realize the depth of the state's fiscal problems. "Nobody likes to cut government.

"But we have no choice,'' Kavanagh said. "This is the worst fiscal crisis since the Great Depression. And you can't avoid doing cuts.''

The plan for the special session originally included deciding whether to send both the sales tax proposal and the permission to divert funds for voter-approved programs to the ballot.

That was jettisoned when legislative leaders realized it was too late to meet the deadline for the election already scheduled on March 9 for local and school issues. The next official election day is the third Tuesday in May.

Even if that weren't the case, Adams said, he doubted he could get the necessary votes for the sales tax referral.